AnalystConsensusTarget updated the narrative for AMBA

Analysts have raised their fair value estimate for Ambarella, increasing the price target from $90.05 to $93.73. They cite solid earnings, growing momentum in edge AI markets, and diverse new IoT design wins as key drivers.

Analyst Commentary

Recent commentary from equity analysts reflects a generally constructive outlook for Ambarella, anchored to its solid Q2 performance and expanding growth opportunities. However, several areas of uncertainty remain as analysts balance near-term momentum with broader sector dynamics.

Bullish Takeaways

• Multiple bullish analysts raised their price targets by citing broad-based revenue strength and consistent beats on quarterly expectations.
• Edge AI remains a core growth driver. New design wins in portable cameras, drones, and enterprise infrastructure support visibility into future upside.
• Diversification within the Internet of Things segment positions Ambarella for continued expansion beyond its legacy security camera footprint.
• Enthusiasm surrounds the company’s product cycle and expanding total addressable market, particularly in robotics and 360-degree camera markets. These factors may accelerate growth into fiscal 2027.

Bearish Takeaways

• Bearish analysts, while acknowledging the strong quarterly results, maintain more tempered ratings due to continued softness in the automotive end market.
• There is caution that further valuation upside may depend heavily on landing a major automotive design win. Current growth is skewed toward IoT and non-auto Edge AI use cases.
• While near-term revenue guidance has been raised, some foresee emerging risks related to competition and the overall macroeconomic environment. These factors could cap future outperformance.
• Profitability and sales estimates have been revised upwards, but there is hesitation to move to a more positive stance until signs of a broader industry recovery are evident.

What's in the News

• Ambarella has completed the repurchase of 49,871 shares, representing 0.13 percent for $2 million, under the buyback program announced in June 2019. No shares were repurchased between May 1, 2025 and July 31, 2025 (Key Developments).
• The company revised its fiscal year 2026 revenue guidance upward and now expects revenue to grow between 31 percent and 35 percent, or approximately $379 million at the midpoint (Key Developments).
• Earnings guidance for the third quarter ending October 31, 2025 projects revenue between $100 million and $108 million (Key Developments).

Valuation Changes

• The Fair Value Estimate has risen slightly to $93.73, up from $90.05.
• The Discount Rate edged down marginally to 10.06 percent, compared to the previous 10.06 percent.
• The Revenue Growth projection increased fractionally to 14.91 percent from 14.78 percent.
• The Net Profit Margin forecast has declined modestly to 13.88 percent, previously 14.11 percent.
• The Future P/E Ratio is now estimated at 76.73x, up slightly from the earlier 74.35x.